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Manufacturing Series: Velodyne LiDAR Drives into San José

/ February 27, 2017 by Nathan Donato-Weinstein

You might not know the name Velodyne LiDar Inc., but there’s a good chance the technology the company pioneered will radically change the way you get around in the not-too-distant future. And a new factory it’s establishing in South San José will help accelerate that transformation while helping to dramatically reduce the still-hefty cost of admission.

The 220-employee company designs and builds lidar sensors used to help self-driving cars “see” the road. It’s a critical piece of the technology puzzle for an industry that’s projected to become a $42 billion market by 2025, according to Boston Consulting Group. If you have ever seen Google’s self-driving cars tootling around Silicon Valley, it’s Velodyne LiDar tech on top that makes it all possible.

Velodyne LiDar – whose technology is being used by Ford, Baidu, Google and others – aims to scale up production amid an anticipated surge in demand. This year, the company will produce more than 10,000 sensors, said Mike Jellen, president and chief operating officer, in an interview. Give it a few years, and the company is planning for 100 million to 200 million. At that price, he said, “we anticipate (the technology) will be in the hundreds of dollars (per unit)… We continue to work on the cost curve.”

The company’s big plans – taking shape inside a 200,000-square-foot building that used to pump out solar panels – are the latest example the growing automotive ecosystem in Silicon Valley. Storied nameplates like Mercedes, Ford, Toyota, BMW and others all have research outposts; electric upstarts Tesla, NextEV, Lucid Motors and LeEco are also growing. So are suppliers such as Delphi Labs, Continental AG and Bosch. Velodyne LiDar itself has also established a separate R&D center in Alameda.

“We believe that because the product is an invention that’s so complicated, the San José area – and the Bay Area – has the right talent, and emerging talent, to help us build effectively,” said Mark Shandley, vice president of operations and supply chain management. “We feel the right engineers are here.”

The future these firms are working on won’t arrive at some far-off date in the future, Jellen notes. “Today you can get an autonomous vehicle in several cities in the world,” he said. “Every month you’ll see announcements of additional cars, additional shuttles. I think it will creep into our lives as on-demand transportation becomes more and more prevalent. If you think of what happened with cell phones, at one time they existed only for the super-rich.”

Think of lidar technology as radar but with lasers, not radio waves, that measure objects’ distances. The device feeds that data back to a computer brain that assembles an extremely detailed picture of the scene. David Hall, Velodyne LiDar’s founder, didn’t invent the technology. But he was the first to attach it to a spinning mechanical assembly that allows a 360-degree, real-time image.

“You get a 3D image — a photo realistic image,” Jellen said. “A car looks like a car. A person looks like a person. Because of that, all of a sudden you could tell what objects are at great distance. For autonomous driving, to drive at speed you have to understand the environment so you don’t make the wrong decision.”

And cars aren’t the only users for the technology. Velodyne LiDar recently introduced the aptly named Puck LITE – a 590-gram disc that’s being marketed at the drone industry for mapping applications.

“There are robotic applications, security applications – basically, wherever you’d like to have 3-D imaging independent of the light. You could have a lidar-based security system with no light source.”

It’s just the latest innovation for Hall, who revolutionized the audio industry in the 1980s with a distortion free subwoofer that’s still coveted today. A third company, Velodyne Marine, produces a structure for the boat industry that dramatically increases stability.

The lidar business started in 2007, after Hall’s invention proved indispensable among contestants in the Defense Advanced Research Agency’s DARPA Grand Challenge – a grueling, 150-mile competition for self-driving cars.

Velodyne’s dramatic facilities expansion comes following a $150 million investment from Ford and Baidu, the Chinese Internet giant, last year. The goal is to spur continued miniaturization, innovation and mass production at the new facility, which the company is calling a “Megafactory.”

Velodyne’s Megafactory in San José

The opportunity to acquire the Hellyer Avenue facility in San José came together quickly for Velodyne, which has long been based in Morgan Hill. “We saw the site and we just really liked the area,” Shandley said. “We need space to do the indoor ranging and alignment process with the sensors. And it was a nice big clean manufacturing space that was move-in ready.”

Right now, company executives are focusing on moving into their new facility and acquiring talent, with immediate plans to grow employment to 360 people. While production will rely on dozens of specialized robots, Shandley said there are still lots of people to hire as the business expands. “We’re looking for embedded software engineers, top electrical engineers, skilled sensor craftsmen, and robotic technicians,” Shandley said.

And Velodyne executives believe that — as long as the expected growth trajectory proves accurate – they could be out of room at the Megafactory before long. Which means cars all of the world could carry a little bit of San José along for the ride.